Correlation Between Dodge International and Transamerica International

Can any of the company-specific risk be diversified away by investing in both Dodge International and Transamerica International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dodge International and Transamerica International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dodge International Stock and Transamerica International Stock, you can compare the effects of market volatilities on Dodge International and Transamerica International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dodge International with a short position of Transamerica International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Transamerica International.

Diversification Opportunities for Dodge International and Transamerica International

0.81

Correlation Coefficient

Dodge International  Transamerica International

Very poor diversification

The 3 months correlation between Dodge and Transamerica is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Transamerica International Sto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica International and Dodge International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dodge International Stock are associated (or correlated) with Transamerica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica International has no effect on the direction of Dodge International i.e., Dodge International and Transamerica International go up and down completely randomly.

Pair Corralation between Dodge International and Transamerica International

Assuming the 90 days horizon Dodge International Stock is expected to generate about the same return on investment as Transamerica International Stock. But, Dodge International Stock is 1.07 times less risky than Transamerica International. It trades about 0.06 of its potential returns per unit of risk. Transamerica International Stock is currently generating about 0.06 per unit of risk. If you would invest  932.00  in Transamerica International Stock on October 5, 2024 and sell it today you would earn a total of  207.00  from holding Transamerica International Stock or generate 22.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.78%
Values	Daily Returns

Dodge International Stock  vs.  Transamerica International Sto

Dodge International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Transamerica International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dodge International and Transamerica International

The main advantage of trading using opposite Dodge International and Transamerica International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Transamerica International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transamerica International will offset losses from the drop in Transamerica International's long position.

The idea behind Dodge International Stock and Transamerica International Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.